Oct. 30, 2009 (The Korea Times) -- By Kim Jae-kyoung, Yoon Ja-young
Staff Reporter
A Korea Times survey of 63 economists, CEOs and economics professors showed that the Korean economy may avoid a double-dip downturn, but a full-fledged recovery is unlikely to come until the second quarter of next year.
The survey showed a broad consensus that it is too early to plan an exit from steps taken to minimize the economic downturn. Survey participants were widely divided over what form of recovery Asia's fourth-largest economy will follow - a U-, W- or Nike (NYSE:NKE) logo-shaped one.
To mark the 59th anniversary of The Korea Times, which falls on Nov. 1, a survey was conducted from Oct. 12 to 23 by phone and e-mail to collect views on the country's economic health in the post-crisis world.
Most said the domestic economy will move from a recovery to an expansion phase before the second quarter of next year.
Fifty-two percent of the respondents answered that the economy will see a meaningful rebound during the second quarter of 2010, while 17 percent said that a full recovery will not come until the fourth quarter. Sixteen percent forecast the economy will move to an expansion phase in the fourth quarter of this year.
The most popular scenario projected by the respondents was a Nike swoosh-shaped recovery path, though a significant portion did see the risk of a double-dip downturn.
The respondents fell into three groups. Thirty-five percent expect the swoosh-shaped recovery, while 27 percent forecast a U-shaped rebound. Seventeen percent predicted a W-shaped, or double-dip downturn, meaning the economy will experience another downturn following a mild recovery. Eleven percent saw a V-shaped rebound, reflecting growing optimism for an early recovery.
"I think that the economy will move to an expansionary phase in the fourth quarter. I expect positive year-on-year growth in the third quarter of this year," ING Group (NYSE:ING) senior Asia economist Tim Condon told The Korea Times.
"A double-dip scenario is very unlikely. China's growth will likely accelerate next year, which will power Korea's export growth. Only if the U.S. experiences a catastrophic double-dip would a double-dip be likely for Korea," he predicted.
When asked what would most delay a recovery, 79 percent cited a lag in the recovery of advanced economies. They said that a delay would further weaken overseas demand, hampering exports, the nation's main growth engine.
Regarding exit strategies to control inflation expectation, a majority of the respondents said that policymakers should continue to maintain supportive policies.
About 44 percent said the government should employ an exit plan in the first quarter of 2010. Twenty-five percent said it should be implemented in the second quarter, and 14 percent said the second half.
